Just like Franchise Disclosure Documents (FDD) and state registrations, a franchise’s SBA registration must be updated annually. The update process includes submission of current disclosure documents, agreements and completion of an online questionnaire. The initial SBA registration is $2,500 currently, and the renewal registration is about ¼ of the initial registration cost.
The SBA Registry is a way for franchisors to get their franchise concept ‘pre-eligible’ for SBA funding. Of course, whether a SBA loan is approved will dependent largely on the resource of the prospective franchisee buyer. The SBA Registry, however, is the means of avoiding the inconsistencies and timely process of having regional SBA offices review the franchise concept for each transaction prior to approving an SBA loan.
In determining if a franchise can be on the SBA Registry, the SBA reviews the franchise agreement and other franchise contracts to ensure that sufficient auspicious of an independent business and other measures are contemplated within the franchise model. Such things as excess or undetermined fees; franchisor controls of over pricing, employee management, daily franchised business operations, and bank account or billing; and limitations on franchised business transferability among other things can render the franchise concept ineligible to be on the SBA Registry. Sometimes factors that could render a franchise ineligible to be on the SBA Registry can be altered or modified via an addendum ; thereby, allowing clear entry on the SBA Registry. For more information about SBA addendums, visit our resource library by clicking on this link: http://gettinsnelsonlaw.com/sba-addendums